Media and entertainment companies need to adopt a multi-generation strategy and change their perceptions about the behavior of older generations if they do not miss a huge potential for growth.
This is one of the main findings of the EY study, Ten opportunities and threats for media and entertainment companies | 2019, which identifies the short list of the most relevant risks and opportunities in the sector for the next 12 months.
In recent years, this industry has built its content and distribution strategies primarily around younger generations. Yet, although Y and Z generation members are considered digital natives, the baby boomers (generally born between 1946 and 1964) generally have higher incomes and are more skillful in content consumption and adoption of technology.
The EY study indicates that baby boomers are more loyal than younger generations.
Thus, they represent an increasingly valuable resource for growth, given that the population at least 65 years of age will outnumber that of children younger than 5 years old by 2020.The report shows that it has become a priority for industry companies to make efforts to understand the specific preferences of baby boomers.
John Harrison, global leader of Media & Entertainment EY, says: "As a demographic group, the older generation is simply too numerous to be ignored and become more influential as it adopts more and more technology. In the context of increased competition and in order to attract even more customers, media and entertainment companies need to expand their attention beyond young demographic groups if they want to succeed in this increasingly complex competitive environment. Data analysis will be essential to understanding how technology is adopted by older generations, which will allow the development of personalized experiences on the right distribution channels and can lead to huge growth opportunities. "
Efforts to compete with digital natives
Beyond demographic age issues, the report also indicates "client obsession" as one of the top ten topics for 2019. With media companies continuously reinventing products to compete with digital natives, it is a complexity that generates lack of consistency, which can lead to a poor client experience.
Many companies do not have the necessary infrastructure to collect relevant information on multiple channels depending on which ecosystems can adapt. To diminish this problem, the report says that industry organizations need to implement more technologies similar to those used by native digitals to help them deliver a better experience to their customers.
Another aspect of "Recalibration for Growth" is investing in new digital projects. Considering how many of the native digital businesses revolutionize their traditional business models, the report emphasizes that, in order to keep the pace, more traditional media organizations must consider a radical shift in the way they acquire, invest and optimize their capital.
Indeed, nearly a quarter (23%) of the media and entertainment industry respondents surveyed by EY Global Capital Confidence Barometer say they are re-analyzing their portfolios every quarter, compared to 1% of respondents in April 2018.
In the context of such rapid technological developments and because media organizations accumulate enormous amounts of personal data, cyber security is also a key threat to this sector. The report highlights that the Internet of Things and an increasing number of connected ecosystems have multiplied the level of potential threats in recent years. Companies need to take steps to design a multi-layered cyber security strategy with special attention to brand assets.
A perfect storm of geopolitical tendencies
The report also identifies that unprecedented perturbations across the entire tax landscape are both a huge opportunity and a threat to industry. A series of macro-trends, including Brexit, trade conflicts, and global orientation towards increased transparency, contribute to a growing sense of uncertainty. At the same time, the largest revision of the US tax code for legal entities over the past 30 years could bring benefits to more companies that have registered their intellectual property rights in the US. Media companies need to set up digital tax features that are agile enough to respond to these turbulences.
Other opportunities and threats mentioned in the report include smart automation that can help companies achieve significant earnings and profit gains, prospects for implementing business models based on direct sales to customers, and enhanced content struggle.